This article first appeared on GuruFocus .
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Total Revenue:$37.7 million, up 13.5% year-over-year.
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GAAP Net Profit:$1.1 million, more than double the level of Q1 last year.
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Gross Profit:$23.9 million, a 5.7% year-over-year increase.
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Gross Margin:63.4%, compared to 68% in the same period last year.
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R&D Expenses:$14.4 million, up 2.9% year-over-year, accounting for 38.1% of total revenues.
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Marketing Expenses:$5.9 million, down 4.8% year-over-year, representing 15.6% of total revenues.
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General and Administrative Expenses:$6 million, down 6.4% year-over-year, representing 15.9% of total revenues.
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Operating Cash Flow:$5.7 million, including interest received of $4.3 million.
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Cash and Equivalents:$366.1 million at the end of Q1.
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Share Repurchase:Approximately 12.5 million class A ordinary shares repurchased for $13.1 million.
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Guidance for Q2 2026 Revenue:Expected to be between $39 million and $40 million, representing year-over-year growth of 13.7% to 16.6%.
Release Date: May 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Agora Inc ( NASDAQ:API ) reported its sixth consecutive quarter of GAAP profitability, with a net profit of $1.1 million, more than double the level of Q1 last year.
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Total revenue for Q1 2026 reached $37.7 million, marking a 13.5% year-over-year increase, exceeding the high end of the company's guidance range.
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The company launched Agent Studio, a no-code environment for building voice AI agents, and introduced Conversational AI agents for both inbound and outbound use cases.
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Agora Inc ( NASDAQ:API ) strengthened its position in the enterprise collaboration market with the launch of the Intelligent Meeting Engine, which offers AI-powered capabilities and end-to-end encryption.
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The company entered a strategic partnership with NetEase Smart Enterprise, expanding its go-to-market opportunities across various sectors, including education and digital entertainment.
Negative Points
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Gross margin decreased to 63.4% from 68% in the same period last year, primarily due to the product mix change, especially with Conversational AI products at a subscale stage.
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Operating cash flow decreased significantly to $5.7 million in Q1 2026 from $17.6 million in Q1 2025.
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The company faced challenges in deploying voice AI in production environments due to the complexity of orchestrating multiple technology layers.
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Despite strong early validation, the revenue contribution from Conversational AI remains relatively low, with expectations to reach around 5% by the summer.
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The market for Conversational AI is still at an early stage, with significant competition, particularly in the US, and challenges in the Chinese market.
Q & A Highlights
Q: Can you provide insights into the growth trends in the overseas and China markets, and the verticals driving this growth? A: Both the China and US international businesses are growing rapidly, with the US market slightly outpacing China. In China, traditional verticals like social, entertainment, and education are recovering, while in the US, live shopping, financial services, and gaming are strong. Overall, Real-Time Engagement (RTE) demand is healthy. (Jingbo Wang, CFO)
Q: What are the primary application scenarios for Conversational AI, and what revenue scale could be achieved by year-end? A: The primary applications are in call centers and IoT. Since launching our Conversational AI Engine, usage has grown over 150% sequentially each quarter. We expect call centers and IoT to be major revenue contributors, aiming for around 5% revenue contribution by summer. (Bin Zhao, CEO)
Q: How is the e-commerce vertical, particularly overseas, developing, and what is its potential revenue contribution for 2026? A: Video-based live shopping is new in developed markets like the US. After a successful event with Whatnot, demand continues to grow, and we've acquired another e-commerce customer. This vertical has significant growth potential. (Jingbo Wang, CFO)
Q: How is the domestic competitive landscape evolving, and what impact does it have on pricing power and revenue growth? A: The market is consolidating, with competitors focusing more on profitability than scale, which should aid revenue growth and margin improvement. Excluding Conversational AI, the core RTE business's gross margin remains stable. (Jingbo Wang, CFO)
Q: What are the unit economics of Conversational AI, and how does it affect the target of turning operating margin-positive by Q4 2026? A: It's early to discuss unit economics, but as we scale and move from POC to deployment, we expect positive gross margins. Long-term, Conversational AI should generate similar or higher margins than current RTE products. Our goal of achieving operating profitability in the second half of the year remains unaffected. (Jingbo Wang, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
